China's manufacturing activity contracted again in February (for the fifth month in a row), but was in line with economists' forecasts. However, the latest data is likely to increase pressure on the government to take additional stimulus measures.
The National Bureau of Statistics (NBS) said the manufacturing PMI fell to 49.1, as expected, from 49.2 in January. A reading below 50 points indicates a reduction in activity in the sector. The NBS added that the decline in the index was caused by seasonal factors, as the Lunar New Year fell on Feb. 10 this year and saw factories shut as workers returned home for the holiday. The non-manufacturing PMI increased to 51.4 (the highest reading since September 2023) from 50.7 in January. Consensus estimates suggested an increase to 50.8. The index has remained above the 50 mark for the 14th month in a row. Meanwhile, the composite PMI remained at 50.9 (the highest value since September 2023). Economists had expected an increase to 51.0.
A separate report submitted by Caixin/S&P Global showed that the manufacturing PMI rose in February to 50.9 from 50.8 in January. Economists had expected a decline to 50.6. It was the fourth straight month of growth in factory activity and the strongest pace since August 2023.
Overall, the PMI data highlights the uneven economic recovery, keeping pressure on authorities as markets demand stronger stimulus measures and reforms to protect China's long-term growth potential.